Exhibit 99.1
Contact: | |
Mallorie Burak | |
Southwall Technologies Inc. | |
Phone: (650) 798-1200 |
For Immediate Release
Southwall Announces Q2 2008 Results
INCREASED GLOBAL DEMAND FOR ENERGY EFFICIENT PRODUCTS
DRIVES CONTINUED GROWTH IN SECOND QUARTER
PALO ALTO, Calif.--(BUSINESS WIRE)—August 12, 2008--Southwall Technologies Inc. (OTCBB: SWTX) announced second quarter 2008 revenue of $13.7 million, up 29.5% from $10.6 million in the first quarter of 2008 and up approximately 48% from 2007 second quarter revenues of $9.3 million. The year over year increase was primarily due to higher sales of Automotive and Window Film products, which offset the decline in Plasma Display revenues. In 2007, the Company made a strategic decision to exit the low margin display business and focus on its core energy efficiency products. For the first six months of 2008, revenues were $24.3 million, a 23% increase over 2007 revenues of $19.8 million.
Second quarter net income increased to $2.2 million, or $.07 per diluted share, compared to net income of $0.3 million, or $.01 per diluted share, in the second quarter of 2007. The second quarter of 2007 included $1 million of other income from sale of a technology and services in 2007. Year to date 2008 net income was $4.1 million, or $.13 per diluted share, compared to 2007 year to date net income of $0.5 million, or $.02 per diluted share.
Second quarter 2008 gross profit was $5.7 million, or 42% of sales compared to $2.7 million, or 30% of sales in last year’s second quarter. Operating profit was $2.8 million, or 20% of sales, compared to negative $0.4 million in the second quarter of last year. A shift in product mix to higher margin, energy conservation products, improved operating efficiencies and continued cost management efforts were the significant factors contributing to the profit improvement.
“We are well positioned for growth in our core energy markets, where our products enable a new level of energy efficiency for green building and automotive design”, said Dennis Capovilla, Southwall’s CEO. “Demand for improved energy efficiency in the automotive and window film markets is reflected in our second quarter results. Due to the seasonality of our business, the second quarter is an important quarter and a significant contributor to our annual revenue and net income.”
“Southwall is committed to continued product innovation and channel expansion to meet an increasing global demand for energy efficiency in buildings and cars”, continued Capovilla. “The recent growth in sales highlights a growing consumer awareness of energy efficiency as a cost-effective and readily-available green technology choice that can have an immediate impact on saving energy and reducing carbon emissions.”
About Southwall Technologies Inc.
Southwall Technologies Inc. is recognized as an innovator in the development and manufacture of high performance, energy-saving films and glass products that dramatically improve the energy efficiency of architectural and automotive glass. Southwall is an ISO 9001:2000-certified manufacturer with customers in over 25 countries around the world, including Audi, BMW, DaimlerChrysler, Guardian, Peugeot-Citroen, Philips, Pilkington, Renault, Saint-Gobain Sekurit, and Volvo.
This press release may contain forward-looking statements, including, without limitation, statements regarding the Company's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements in this press release are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presented. These risks include the possibility that the Company’s expected future results will be materially worse than estimated, that the Company may not continue to be profitable in future quarters or may not be able to achieve future long-term growth, that there will be a decline in one or more portions of our business in 2008 or thereafter, that the Company will not be successful in improving operations performance or controlling costs, that the Company will suffer a decline in manufacturing or financial effectiveness, that the Company’s new product development and joint venture will not be successful, that there may be decreasing demand in markets in addition to the electronic display market, and that the Company will not be able to secure additional financing if required, as well as risks associated with its failure to meet potential covenant requirements under future credit facilities. Further risks are detailed in the Company's filings with the Securities and Exchange Commission, including those set forth in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on March 31, 2008.
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SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net Revenues | $ | 13,685 | $ | 9,250 | $ | 24,255 | $ | 19,756 | ||||||||
Cost of revenues | 7,960 | 6,507 | 13,679 | 12,603 | ||||||||||||
Gross profit | 5,725 | 2,743 | 10,576 | 7,153 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research & Development | 688 | 870 | 1,397 | 2,239 | ||||||||||||
Selling, general and administrative | 2,280 | 2,282 | 4,318 | 4,810 | ||||||||||||
Impairment charge (recoveries) for long-lived assets | - | - | - | (8 | ) | |||||||||||
Total operating expenses | 2,968 | 3,152 | 5,715 | 7,041 | ||||||||||||
Income (loss) from operations | 2,757 | (409 | ) | 4,861 | 112 | |||||||||||
Interest expense, net | (123 | ) | (167 | ) | (262 | ) | (280 | ) | ||||||||
Other income (expenses), net | (79 | ) | 1,043 | 114 | 1,048 | |||||||||||
Income before provision for income taxes | 2,555 | 467 | 4,713 | 880 | ||||||||||||
Provision for income taxes | 207 | 5 | 320 | 186 | ||||||||||||
Net income | 2,348 | 462 | 4,393 | 694 | ||||||||||||
Deemed dividend on preferred stock | 122 | 122 | 244 | 244 | ||||||||||||
Net income attributable to common stockholders | $ | 2,226 | $ | 340 | $ | 4,149 | $ | 450 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.08 | $ | 0.01 | $ | 0.15 | $ | 0.02 | ||||||||
Diluted | $ | 0.07 | $ | 0.01 | $ | 0.13 | $ | 0.02 | ||||||||
Weighted average shares used in computing net income per share : | ||||||||||||||||
Basic | 28,065 | 27,513 | 27,943 | 27,327 | ||||||||||||
Diluted | 34,555 | 28,498 | 34,037 | 28,033 |
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,524 | $ | 6,492 | ||||
Restricted cash | 315 | 294 | ||||||
Accounts receivable, net | 8,077 | 4,346 | ||||||
Inventories, net | 6,527 | 5,640 | ||||||
Restricted cash loans | 1,330 | - | ||||||
Other current assets | 854 | 837 | ||||||
Total current assets | 24,627 | 17,609 | ||||||
Property, plant and equipment, net | 17,623 | 17,071 | ||||||
Restricted cash loans | - | 1,242 | ||||||
Other assets | 700 | 1,345 | ||||||
Total assets | $ | 42,950 | $ | 37,267 | ||||
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long term debt | $ | 4,040 | $ | 1,149 | ||||
Accrued payable | 2,293 | 964 | ||||||
Accrued compensation | 1,239 | 1,267 | ||||||
Other accrued liabilities | 4,989 | 6,350 | ||||||
Total current liabilities | 12,561 | 9,730 | ||||||
Term debt | 5,831 | 8,277 | ||||||
Other long term liabilities | 2,587 | 2,567 | ||||||
Total liabilities | 20,979 | 20,574 | ||||||
Series A, convertible preferred stock | 4,810 | 4,810 | ||||||
Stockholders' equity: | ||||||||
Common stock | 28 | 28 | ||||||
Capital in excess of par value | 78,301 | 78,290 | ||||||
Accumulated other comprehensive income: | ||||||||
Translation gain on subsidiary | 5,651 | 4,776 | ||||||
Accumulated deficit | (66,819 | ) | (71,211 | ) | ||||
Total stockholders' equity | 17,161 | 11,883 | ||||||
Total liabilities, preferred stock and stockholders' equity | $ | 42,950 | $ | 37,267 |
SOUTHWALL TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six months ended | ||||||||
June 30, | June 30, | |||||||
2008 | 2007 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 4,393 | $ | 694 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Deferred income tax | (16 | ) | (66 | ) | ||||
Impairment (recoveries) from long-lived assets | 0 | (8 | ) | |||||
Depreciation and amortization | 1,515 | 1,370 | ||||||
Stock-based compensation | 77 | 185 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (3,908 | ) | (2,874 | ) | ||||
Inventories, net | (887 | ) | (509 | ) | ||||
Accrued restructuring | 0 | (60 | ) | |||||
Other current and non-current assets | 616 | 142 | ||||||
Accounts payable and accrued liabilities | (291 | ) | (254 | ) | ||||
Net cash provided by (used in) operating activities | 1,499 | (1,380 | ) | |||||
Cash flows from investing activities: | ||||||||
Restricted cash | 0 | (406 | ) | |||||
Proceeds from sale of property, plant and equipment | 0 | 8 | ||||||
Expenditures for property, plant and equipment | (898 | ) | (438 | ) | ||||
Net cash used in investing activities | (898 | ) | (836 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 179 | 357 | ||||||
Borrowings from equipment financing | 473 | 0 | ||||||
Borrowings on line of credit | 0 | 3,000 | ||||||
Investment credit in Germany | 0 | (3 | ) | |||||
Repayments on line of credit | 0 | (2,996 | ) | |||||
Repayments of notes payable | (596 | ) | (539 | ) | ||||
Net cash provided by (used in) financing activities | 56 | (181 | ) | |||||
Effect of foreign exchange rate changes on cash | 375 | (190 | ) | |||||
Net increase(decrease) in cash and cash equivalents | 1,032 | (2,587 | ) | |||||
Cash and cash equivalents, beginning of period | 6,492 | 5,524 | ||||||
Cash and cash equivalents, end of period | $ | 7,524 | $ | 2,937 | ||||
Supplemental cash flows disclosures: | ||||||||
Interest paid | $ | 426 | $ | 375 | ||||
Income taxes paid | $ | 223 | $ | 186 | ||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||
Dividends accrued | $ | 244 | $ | 244 |